Terms Explained

Holding Common Stock Makes an Investor an Owner in the company.

What is Common Stock?

Often referred to as equity, common stock represents ownership in a publicly traded company. It entitles you as an investor to a portion of the company’s earnings and allows you to receive dividend payments when paid out.

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What is an Index?

An index is a means by which to track the performance of a basket of securities through a standardized metric. There are various indexes that capture specific areas of the market such as the S&P 500, Dow Jones Industrial Average(DJIA), Nasdaq, Russell 2000(RUT) and many others.

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ETFs are popular investment products for investors wanting to own a basket of stocks.

What is an ETF?

Short for Exchange Traded Fund, ETFs are currently one of the more popular investment products for investors to get started with and now there are thousands to choose from to fit your investment strategy.

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Investors pool their money together into Mutual Funds with a designated fund manager.

What is a Mutual Fund?

A mutual fund is a financial vehicle where various investors elect to pool their money together with a designated fund manager who will select stocks or other investment securities for the fund.

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What are Small Cap Stocks?

A small-cap stock is a company whose market capitalization is between $300 million and $2 billion. These companies are smaller in market value but will often still be included in the investment strategy for an equity growth portfolio.

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What are Mid Cap Stocks?

A mid cap stock is a company whose market capitalization is between $2 and $10 billion. These companies will often be included in the investment strategy of various equity growth funds.

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What are Large-Cap Stocks?

A large-cap stock is a company with a market capitalization value of at least $10 billion and will include well established companies who are often deemed as industry leaders.

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Market Value can fluctuate constantly depending on how the investment community feels about an asset.

What is Market Value/Capitalization?

The market value reflects how the whole investing community puts a price to a business or particular asset in the open market itself. Likewise, it captures how investors feel about the future prospect of a company since it is an aggregate of estimated future returns for the stock of a company.

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Investors Should Ask Themselves if their Portfolio is Diversified.

Why Portfolio Diversification Is Important

Diversification is a word that is talked about frequently in investment circles and among those just getting started. This a word that shouldn’t scare anyone but can take on many different meanings and levels when constructing your portfolio.

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